Working Tax Credits

Part of the debate – in Westminster Hall at 4:23 pm on 30th November 2011.

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Photo of Chloe Smith Chloe Smith The Economic Secretary to the Treasury 4:23 pm, 30th November 2011

I thank her very much for her consideration in the sequencing of interventions and I will come on to exactly that point.

I will continue to speak briefly about the high level need for action which drove yesterday’s announcements. As hon. Members will know, the UK economy is recovering from the biggest financial crisis in generations. June 2010’s Budget set out the Government’s plans to reduce the deficit and rebuild the economy. However, since then—and this is the crucial point from yesterday’s analysis which accompanied the OBR’s figures, and both must be taken together in my view—the UK economy has been hit by a number of shocks. The OBR names three: first, higher than expected inflation, which the OBR calls an “external shock”; secondly, ongoing instability from the euro area crisis; and; thirdly, the full and permanent damage done by the 2008-09 financial crisis.

It is unwise not to recognise those three major factors. It is absolutely vital that we tackle our debts. It is absolutely vital that we react appropriately and wisely to the economic situation presented to us, and I think that households know that. No household will thank a Government who, instead of dealing responsibly with that situation, carried on spending, carried on borrowing and carried on racking up the debt to do so.